Event: Borey Media reported that it achieved operating revenue of 311 million in the first half of 2018, down about 22% from 397 million in the same period of 2017. if the traditional business of active divestiture is excluded, the company's revenue actually increases by about 11%. To achieve a net profit of 17.89 million, compared with the loss in 2017 has been significantly improved, the company gradually divested the unprofitable business, the strategy of reducing the burden is gradually producing a positive effect.
Educational assets remain sound. In the first half of 2018, Bouri Education achieved an operating income of 64.74 million yuan, an increase of about 12% over the same period last year, and a net profit of 21.98 million yuan, an increase of about 19% over the same period last year, continuing to be one of the company's most stable profitability assets. As one of the top schools in Chengdu, Shude Boli School still maintains an undergraduate promotion rate of 94% and a heavy undergraduate promotion rate of 55%. At present, the company is actively expanding the educational territory, and school construction plans in Longquan, Airport Metro and other areas are also under negotiation.
Control the cost of the game business. Since 2018, the overall pressure on the game industry has intensified. Borey's gaming business is also under pressure, with gross profit margins down 1.4 percentage points from 2017 to about 15.8%. In order to reduce the cost pressure, the company cut four studios in the first half of the year. By the end of the first half of 2018, the company had 18 games in operation, and the new game "National Master H5" was officially put into operation in January, with a total flow of nearly 40 million in the first half of the year. In the second half of 2018, the company will continue to promote the launch of works such as "National Master 2" and "Big talk Wukong", which is expected to improve the business situation.
The advertising business is steadily rising. In the first half of 2018, the company's advertising business achieved revenue of 135 million yuan, a significant increase compared with the same period in 2017, and the gross profit margin also increased by about 1 percentage point to 18.43% over the same period. The expansion of outdoor advertising is the main driving force: in the first half of 2018, the revenue of Bouri's outdoor advertising business exceeded 128 million, an increase of more than 60% over the same period. The determination of the advertising resources of bus shelters in Wuhan and the cooperation with Chengdu Chengnan high-speed media have promoted the overall improvement of the company's business.
Profit forecast and investment advice. Not considering public transport media and modern communication for the time being, it is estimated that the EPS from 2018 to 2020 will be 0.04, 0.03 and 0.04 yuan, respectively, and the corresponding PE will be 105 times that of 102. 106. We believe that the core focus of Bouri Communication lies in the future asset integration and the reform of state-owned enterprises, we should pay attention to the future reform trend of the company, and do not make investment rating suggestions to Bouri Communication for the time being.
Risk tips: reform efforts and approval time are not as expected, and the performance of M & A targets is not as good as expected risks.